Tax Knowledge, Penalties and Tax Compliance in Small and Medium Scale Enterprises in Nigeria

Abstract

The study investigated the impacts of tax payers' knowledge and penalties on tax compliance amongst small and medium enterprises in Nigeria using a survey research design. The data obtained from questionnaire were analyzed using the Ordinary Least Square regression method. The results showed that tax knowledge had a positive significant impact on tax compliance while tax penalty had insignificant positive impact on tax compliance. Thus, the study shows that tax knowledge has a higher tendency to promote tax compliance than tax penalty. Government should therefore do everything possible to increase public knowledge on tax matters and tax education should be included in school curricula at all times. Small and medium scale business owners should also seek to advance their tax knowledge and awareness for the mutual benefits of the governments and taxpayers.

Tax Information, Administration and Knowledge on Tax Payers’ Compliance of Block Moulding Firms in Ekiti State

“…Tax payers knowledge on tax administration (TAK) had an unstandardised beta coefficient of 0.322 with a t-value of 3.682 and p-value that is lesser than 5% level of significance, this signifies that for every increase in the level of tax payers knowledge of tax laws, there will be 32.2% increase in the level of tax compliance by tax payers as regards filing all required tax returns with respect to tax code, regulations and court decision. The findings of the study are in consonance with [3] which disclosed that tax knowledge had positive significant impact on the level of tax compliance among small and medium scale enterprises in Nigeria and with the view expounded by [26] that the degree of knowledge and information is an important factor in the way taxpayers' behave in terms of the level of compliance.…”

“…The early researchers such as [6]; [8]; [38] based their work on economic perspective of tax compliance and they identified tax rate, penalty and detection probability as factors influencing taxpayers' behaviour. [38] asserted that taxpayers' behaviour of non-compliance depends on their belief of the probability of being detected through an audit and the severity of legal penalties imposed. The structural factors, which are beyond the taxpayers' control, are usually exogenously determined.…”

The Influence of Tax Understanding, Tax Awareness and Tax Amnesty toward Taxpayer Compliance

“…Saad (2014) also pointed out that tax knowledge contributes to the noncompliant behavior of taxation. Similarly, Oladipupo & Obazee (2016), Redae & Sekhon (2016), and Olaoye, Ayeniagbaje, & Alaran-ajewole (2017) who found a positive and significant influence on the understanding of taxpayer compliance. While Andinata (2015) stated that knowledge and understanding of tax…”

“…The lack of taxpayer's understanding of the tax laws causes them to be unable to comply with their obligations, so they become non-compliant taxpayers (Hardiningsih & Yulianawati, 2011). Several researchers have proven that tax understanding is able to influence taxpayer compliance positively and significantly (Adiasa, 2013;Saad, 2014;Ananda, 2015;Andinata, 2015;Andreas & Savitri, 2015;Nurhayati, Halimatusadiah, & Diamonalisa, 2015;Agustiningsih & Isroah, 2016;Ilhamsyah, Endang, & Dewantara, 2016;Nugroho, Andini, & Raharjo, 2016;Oladipupo & Obazee, 2016;Redae & Sekhon, 2016 Andinata (2015) found different perspectives, the understanding of taxation rules has no significant effect on the personal compliance of taxpayers. Saad (2014) stated that a lack of taxation understanding could cause taxpayer noncompliance behavior.…”

Faktor-Faktor Yang Mempengaruhi Kepatuhan Wajib Pajak Dalam Membayar Pajak

“…Penelitian Suyanto dan Putri (2017) menunjukkan tax amnesty tidak berpengaruh terhadap kepatuhan wajib pajak. Sanksi pajak adalah tindakan penghukuman yang dikenakan berdasarkan undang-undang pajak untuk suatu tindakan yang dilarang, atau kegagalan dalam melakukan tindakan yang diperlukan seperti tidak mengembalikan file tepat waktu atau mengisi pengembalian yang salah atau undervalued dan lainnya (Oladipupo dan Obazee, 2016). Ngadiman dan Huslin (2015), dan Rahayu (2017) mengemukakan bahwa sanksi pajak berpengaruh terhadap kepatuhan wajib pajak.…”